6 December 2023 - Ninety One, the global investment manager with an emerging market heritage and perspective, and in excess of US$ 150 billion in assets, launches its 2024 investment views.
A radical reset in borrowing costs has changed the rules of the game for investors. Ninety One assesses the outlook for 2024 and beyond, discussing where to invest for a new market cycle.
The fast view:
- Macroeconomic risks are to the downside. The price to be paid for the shift into a new interest-rate regime is higher than the market expects.
- Cyclical bear markets offer attractive entry points to structural themes, as well as shorter-term cyclical opportunities.
- For the first time in a decade, US and the European bond valuations are competitive versus other asset classes. For emerging market (EM) debt investors, declining inflation and positive fundamentals provide opportunities, especially in Latin America.
- Slowing global growth will challenge equity markets. But dispersion is increasing within and between equity sectors and styles, creating opportunities for active investors. The bottom is at last in sight for EM equities.
- By region, fundamentals in many developing economies are much improved and underappreciated. The emergence of a multi-polar world should strongly boost capital investment and growth across many parts of the developing world.
- China remains in a multi-year transition to a more domestically driven, higher value-add economy, with a new, more stable, lower equilibrium level of growth. It is believed that its domestic consumption growth will stabilise, in turn supporting global growth, especially for developing economies. The result could tail previous recoveries.
- Market weakness on growth concerns, which are already partly discounted, should provide useful entry points into diverse areas with interesting long-term potential. Among them, natural-resources equities stand out, many of which are being positively impacted by the structural energy-transition trend. The transition will be hungry for raw materials.
- The traditional 60:40 equity/bond portfolio may be ill-suited to a higher-rate, more volatile environment. Investors should incorporate greater asset allocation flexibility, as well as liquid diversifiers like gold and commodity equities.
- Be wary of cash because interest rates could fall quickly. This is a time to extend duration and lock in higher rates.
To access additional Ninety One’s 2024 Investment Views – please click here.